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Cell phones set to ring up sales rebound

New features such as picture messaging, built-in cameras, color screens and low prices will mean growth for the mobile phone market this year, a new study says.

The worldwide mobile phone industry is back on its feet, and new products and services will lead to a sales rebound late this year, a new report predicts.

Gartner Dataquest's study found that mobile phone sales totaled 98.7 million units in the second quarter, an 0.8 percent increase from the same period last year. But this figure disguises other signs that the industry is positioned for stronger growth, said the research company, which predicts 5 percent growth for the year.

Key to increased sales will be a slew of new product lines featuring color displays, built-in cameras and picture messaging, Gartner said. What's more, these devices are being priced to encourage entry-level buyers, as well as those looking to upgrade their existing handsets.

Telecom operators, for their part, are heavily publicizing services such as picture messaging, also known as MMS (Multimedia Message Service). Many of the services may boost revenue generated from subscribers and those who replace their devices, according to a statement from Gartner's Bryan Prohm, senior analyst with the Mobile Communications Worldwide research group.

The combination of new features and new, low-priced handsets will add up to a strong fourth quarter for mobile phone sales, Gartner said, and may even trigger network operators to offer low-priced, prepaid packages.

"We continue to believe that worldwide mobile terminal sales to end users will reach approximately 420 million units in 2002," Prohm said.

Looking at the big picture, the industry this year managed to eradicate its huge inventory problems leftover from unrealistic sales expectations in the late 1990s. Huge demand in fast-growing parts of Asia and the Middle East helped the industry achieve this, Gartner said.

Nokia maintained its dominant position in the second quarter, with 35.6 percent of the market and sales of roughly 35 million units. Motorola followed as a distant second, with 15.7 percent of the market and about 15.4 million units sold. Samsung showed the strongest growth out of the top three, increasing from about 6 million units sold in the first quarter to about 9 million units for the second quarter, and taking 9.5 percent of the second-quarter market.

ZDNet UK's Matthew Broersma reported from London.